Transaction cost economics shifted significantly in India’s 2025 crude procurement as geopolitical costs exceeded traditional commercial metrics. While US crude imports to India increased by 65.6% to $8.2 billion during April-December 2025, Russian crude imports contracted by more than 17%, falling from $40 billion to $33.1 billion in the same period.
December 2025 reflected expanded cost calculations. Russian crude shipments to India totaled $2.71 billion, down 15.15% from $3.2 billion in December 2024, as refiners incorporated geopolitical transaction costs—compliance burden, reputational risk, market access implications—into total cost assessments beyond traditional price and delivery metrics.
Alternative suppliers offered lower total transaction costs. Saudi Arabia’s 61% growth to $1.75 billion in December 2025 benefited from low geopolitical transaction costs. The United States’ 31% increase to $569.30 million reflected minimal compliance burden. Iraq and the UAE, contributing $2.37 billion and $1.65 billion, involved straightforward transaction costs.
Transaction cost expansion followed the US imposition of a 25% punitive tariff on Indian goods on August 27, 2025. This policy dramatically increased geopolitical transaction costs for Russian crude, including compliance monitoring, documentation requirements, and risk management overhead. Total transaction costs exceeded traditional price differentials. Russian crude imports declined from $3.62 billion in July 2025 to $2.71 billion in December 2025.
India’s total crude oil imports from all sources reached $11.29 billion in December 2025, up 9.1% from $10.34 billion in December 2024. Cumulative imports for April-December 2025 totaled $105.10 billion, compared to $109.33 billion in the corresponding period of 2024. The transaction cost evolution demonstrates how geopolitical factors enter economic calculations.
